From LATE to ATE: A Bayesian approach
Isaac M. Opper
Journal of Econometrics, 2024, vol. 246, issue 1
Abstract:
We develop a Bayesian model that produces a posterior distribution of the marginal treatment effect (MTE) function. The method provides researchers with a principled way to extrapolate from the observed moments using flexible assumptions, thereby allowing researchers to generate plausible ranges of important and potentially policy-relevant quantities of interest. We then use the model to propose a natural decomposition of the posterior variance into “statistical uncertainty,” i.e., variance that stems from the imprecise estimation of the observed moments, and “extrapolation uncertainty,” i.e., variance that stems from uncertainty in how to extrapolate away from the observed moments. We conclude by showing that under our preferred priors, even in an experiment as large as the Oregon Health Insurance Experiment, the main source of uncertainty in the ATE comes from uncertainty in the true values of the observed moments.
Keywords: Marginal treatment effects; Bayesian models; Instrumental variables; Compliers; Gaussian process; RCTs (search for similar items in EconPapers)
JEL-codes: C11 C26 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:econom:v:246:y:2024:i:1:s030440762400246x
DOI: 10.1016/j.jeconom.2024.105895
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